The Walt Disney Co. (DIS) remains a good stock to trade, says Stephen “Sarge” Guilfoyle.
The entertainment giant reported a good fiscal first quarter with an adjusted EPS of $1.06, an increase of 231% year-over-year and beat Wall Street estimates by more than 40 cents. Disney’s revenue during the three-month period also grew annually by 34.3% and totaled $21.38 billion for the quarter.
“If we can just keep this darned virus from re-imposing itself in a big way, Disney is indeed, on its way,” he wrote in a recent Real Money Pro column. Get more of his trading ideas and investment strategies on Real Money.
Disney remains a Guilfoyle favorite and he deemed it the stock of the year in December.
“Of course, this being my pick of the year, I will have to engineer as skillful a re-entry as possible,” he wrote. At least you know that I do indeed play my game as much as talk about it. Note to my fellow talking heads... offense intended.”
Real Money contributor Ed Ponsi says he's raising the bull flag for Disney, too, despite a fitful two years, and the entertainment giant's chart formation suggests a nice move higher, though it still must clear a couple obstacles.
While Disney’s direct-to-consumer segment reported operating losses, the number of subscribers has ramped up. Disney+ subscriptions globally rose by 11.8 million during the three months versus expectations for 7 million. The company now has 129.8 million, an increase of 37% from a year ago. Hulu SVOD subscriptions also rose by 16% to 40.9 million, Hulu Live TV & SVOD subs gained 8% to 4.3 million and ESPN+ subscriptions rose by 76% to 21.3 million.
Investors will find it positive that “Disney is willing to subsidize this business unit in order to prioritize growth in this area,” Guilfoyle wrote. “The strategy is working. It's clear that while cable and broadcast are eroding slowly, they are both still powerful drivers capable of getting the businesses where the firm must spend capital.”
Consumers were happy to spend time and money at Disney’s theme parks and venues. Revenue rose by 101% to $7.234 billion while the segment’s operating income improved to $2.45 million, an increase from an operating loss of $119 million and “absolutely crushed expectations for both of these numbers,” he wrote.
“The re-emergence of the theme parks, resorts, and cruise ships can go a long way here as the firm has no plans to cut back on content in the least,” Guilfoyle wrote. “Quite the contrary.”
